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TMI Blog2021 (6) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... - on Consultancy Services used exclusively for exempted supply of MEIS Licence and also availed Input Tax Credit of ₹ 50,438/- in respect of Telephone services, Courier Service, Computer Repairing Services, Internet Services, Rental Services and purchase of Stationary items used for taxable supplies including Zero-rated supplies as well as exempted supply of MEIS Licence. Rule 42(1) provides the manner of determination of the amount of input tax credit to be reversed in terms of Section 17 (2) of CGST Act, 2017.I observe that the appellant has produced a chart showing details of availment of Input Tax Credit of ₹ 14,362/- in respect of Input Service used exclusively for exempted supply of MEIS Licence and ₹ 50,438/- in respect of Input and Input Services used for taxable supplies including Zero-rated supplies as well as exempted supply of MEIS Licence - he amount of input tax credit attributable to supply of exempted supply in terms of Rule 42 of the CGST Rules, 2017 during the month of August 2018 comes to ₹ 16,313/-(₹ 14362/- in respect of consultancy service used exclusively for supply of exempted service and ₹ 1951/- being common input tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2017. 2.1 However, on examination of documents of refund claim for the period April-2019-20, the adjudicating authority has found inadmissible amount of ₹ 31,067/- as wrong ITC and ₹ 1,37,750/- as Other and accordingly, a Form GST RFD-08 Show Cause Notice No.ZS0806200063095 dated 05.06.2020 was issued to the appellant with the Remark i) that the claimant vide letter dated 01.06.2020 has withdrawn claim of ₹ 31,067/- on account of ITC not reflected in GSTR 2A and ii) In August-2018 the claimant has effected exempted clearance and claimed erroneous refund claim ₹ 1,27,694/- + interest ₹ 10,056/- and refund application was liable to be rejected. 2.2 Further, the adjudicating authority in Form-GST RFD-06 vide Order in Original No. ZY0806200259640dated 21.06.2020 has passed the order by giving Remark i) The claimant accepted wrong availment of ITC ₹ 31,067/- ii) The claimant not reversed proportionate ITC ₹ 1,37,750/- on exempted sales for the month of 8/2018 under Section 17(2) of CGST, 2017 and submissions are not tenable. 3. Being aggrieved with the impugned order dated 21.06.2020, the appellant has filed appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed wrongly. 3.4 The learned Assistant Commissioner has not given any findings on the detailed submissions of the Appellant, nor has he given any reason for rejection of certain amounts and no provisions of law have been cited in the impugned Adjudication Order. 3.5 In terms of Section 17(1) of the Central Goods and Services Tax Act, 2017, where the goods or services or both are used by the registered taxable person partly for the purpose of any business and partly for other purposes, the amount of input tax credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. 3.6 In terms of Section 17(2) of the Central Goods and Services Tax Act, 2017, where the goods and/or services are used by the registered person partly for effecting taxable supplies including zero rated supplies under CGST or IGST Act and partly for effecting exempt supplies, the amount of credit shall be restricted to so much of the input tax as is attributable to the taxable supplies including zero-rated supplies. 3.7 In terms of Section 2(47) of the Central Goods and Services Tax Act, 2017, Exempt supply means supply of any goods or services or both which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voice level in form GSTR-2 and at summary level in form GSTR-3B. (h) Input tax credit left after attribution of input tax credit under clause (f) shall be called common credit, be denoted as 'C2' and calculated as - C2 = C1- T4. (i) The amount of input tax credit attributable towards exempt supplies, be denoted as 'D1' and calculated as - D1= (E F) C2. Here, 'E' is the aggregate value of exempt supplies, i.e., all supplies other than taxable and zero rated supplies, during the tax period, and 'F' is the total turnover of the registered person during the tax period. (j) The amount of credit attributable to non-business purposes if common inputs and input services are used partly for business and partly for non-business purposes, be denoted as 'D2', and shall be equal to five per cent of C2. (k) The remainder of the common credit shall be the eligible input tax credit attributed to the purposes of business and for effecting taxable supplies including zero rated supplies and shall be denoted as 'C3', where, C3 = C2 - (D1+D2). (l) The amount 'C3', 'D1' and 'D2' shall be computed separately for i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit. 3.17 In this regard, kind attention of the Hon ble Appellate Authority is invited to the provisions of Rule 89 (4) of the CGST Rules, 2017 which has provided the formula for claiming refund of Input Tax Credit in case of supplies of zero rated goods/services without payment of IGST in terms of Section 16(3) of the IGST Act, 2017. 3.18 Accordingly, in terms of Sub-Section (3)(a) of Section 16 of the Integrated Goods and Services Tax Act, 2017 read with Rule 89 of the Central Goods and Services Tax Rules, 2017, the Appellant had claimed a refund of ₹ 33,63,958/- by taking into account Turnover of zerorated supply of goods, Net ITC and Adjusted Total Turnover as reflected in the Return Form GSTR-3B for the month of August 2018. A copy of the Return Form GSTR-3B for the month of August 2018 is attached. 3.19 During the month of August 2018, the Appellant had transferred MEIS Scrips/Licence on receipt of consideration charges amounting to ₹ 8,69,740/- which is reflected in Para 3.1(c) of the Form GSTR-B for Augus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we had paid the excess credit amounting to ₹ 16,313/- computed separately for input tax credit of Central Tax, State Tax and Integrated Tax vide entry numbers DC0806200082724 dated 20-06-2020 in our electronic ledger account /Form GSTR-3B and intimation has been sent through Form GST DRC-03. Copies of the electronic ledger account /Form GSTR-3B and Form GST DRC-03 are attached. 3.29 We have also paid an amount of ₹ 5335/- vide Challan No.20060800124587 dated 20-06-2020 being interest on the excess input tax credit availed by us. Copy of the Challan No. 20060800124587 dated 20-06-2020 is attached. 3.30. In view of the above facts, Net ITC for the purpose of refund claim has been worked out as ₹ 34,14,938/- (₹ 34,31,251 ₹ 16,313/-). 3.31 Therefore, applying the formula for calculating Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC Adjusted Total Turnover, the Appellant had reworked the revised refund claim for August, 2018 as ₹ 33,47,965/- as shown below :₹ 2,20,42,667 x ₹ 34,14,938 ₹ 2,24,83,613 = ₹ 33,47,965. 3.32 In view of the above revisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed. (2) . (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period : Provided that no refund of unutilised input tax credit shall be allowed in cases other than- (i) zero rated supplies made without payment of tax; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council : Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed under rule 89(4A) or 89(4B) or both. Further, in terms of Clause (E) of Sub-rule (4) of Rule 89 ibid Adjusted Total Turnover means the sum total of the value of (a) the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the turnover of services; and (b) the turnover of zero-rated supply of services determined in terms of clause (D) above and non-zero-rated supply of services, excluding (i) the value of exempt supplies other than zero-rated supplies; and (ii) the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B) or both, if any, during the relevant period. E. Section 17(2) of the CGST Act, 2017 provides that (2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act, and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. F. Rule 42(1) of CGST Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable, the value of E/F shall be calculated by taking values of E and F of the last tax period for which the details of such turnover are available, previous to the month during which the said value of E/F is to be calculated; Explanation: For the purposes of this clause, it is hereby clarified that the aggregate value of exempt supplies and the total turnover shall exclude the amount of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the Constitution and entry 51 and 54 of List II of the said Schedule; (j) the amount of credit attributable to non-business purposes if common inputs and input services are used partly for business and partly for non-business purposes, be denoted as D2 , and shall be equal to five per cent. of C2; and (k) the remainder of the common credit shall be the eligible input tax credit attributed to the purposes of business and for effecting supplies other than exempted supplies but including zero rated supplies and shall be denoted as C3 , where,- C3 = C2 - (D1+D2); (l) the amount C3 shall be computed separately for input tax credit of central tax, State tax, Union territory tax and integrated tax; (m) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al value of zero rated and exempted supply and ₹ 3363958/- is the amount of refund sanctioned for August, 2018. 8.4 I observed that the appellant has argued that during the month of August 2018, the Appellant had transferred MEIS Scrips/Licence on receipt of consideration charges amounting to ₹ 8,69,740/- which is reflected in Para 3.1(c) of the Form GSTR-B for August 2018 as with effect from 13-10-2017, Duty Credit Scrips [MEIS etc.] falling under Heading 4907 have been exempted from levy of Goods and Service Tax by Notification No. 35/2017-C.T. (Rate), dated 13-10-2017.I find that the appellant has further submitted that for the supply of MEIS Licence, the Appellant had availed Input Tax Credit of ₹ 14,362/- on Consultancy Services used exclusively for exempted supply of MEIS Licence and also availed Input Tax Credit of ₹ 50,438/- in respect of Telephone services, Courier Service, Computer Repairing Services, Internet Services, Rental Services and purchase of Stationary items used for taxable supplies including Zero-rated supplies as well as exempted supply of MEIS Licence. 8.5 I find that the Rule 42(1) provides the manner of determination of the am ..... X X X X Extracts X X X X X X X X Extracts X X X X
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